Articles

Extended Play: Can Vinyl Save Music Retailers?

By Bob Hopkinson

The past fifteen years has seen a flood of stories predicting the demise of the music industry. To listen to "the Big Three" (formerly five) major labels tell it, MP3s and piracy are killing music. Musicians are going broke, record stores are closing, and the music we listen to has no value. Can the "value of music" really be measured in dollar signs? Strawberry Jam may cost $9.99 on iTunes, yet there are legions of Animal Collective fans for whom that record means much more than ten dollars.

And musicians have always been broke -- arguably creating some of their best work as a direct result of it. MP3s and piracy aren't stealing from musicians; they're taking revenue from major labels unwilling to modify an old business strategy. Historically, musicians generate most of their income from performing. There are obvious exceptions to this rule (the Beatles come to mind), but by and large, artists make a living from concert ticket sales. Albums are marketing conduits to drive fans to shows. If musicians were making sustainable amounts of cash from record sales, groups like NOFX wouldn't tour incessantly.

The story surrounding Sugar Ray'sFloored is an easy way to understand what the Digital Revolution has done to the music industry. Floored was released in 1997, two years before the Napster riots of '99 and seven years prior to the launch of the iTunes Store. The record was Sugar Ray's sophomore release.

Along with groups like the Deftones, Sugar Ray came up in the mid-90s SoCal nu metal scene. The band recorded their debut album with DJ Lethal, future member of (gasp) Limp Bizkit. That first album was a flop; 1995's Lemonade and Brownies charted at 48 in Sweden and made waves absolutely nowhere else.

Two years later, Sugar Ray released Floored, a record nearly identical to its predecessor, save for one song. "Fly" is a laid-back, reggae-influenced track that's a bit out of place among the heavier sounds filling the rest of the album. "Fly" became a smash radio hit and the corresponding video found itself in constant rotation on MTV and VH1. In 1997, Floored peaked at 12 on the US Billboard charts, 10 in Canada, and dropped down to 52 in Sweden.

By '97, major labels had already seen wasted profit margins in releasing CD singles and had nearly phased out any way of purchasing the song "Fly" other than paying $14.99 at a retailer like Tower Records for the entire Floored album. In 2004, the iTunes Store opened, allowing consumers to purchase "Fly" for $.99 -- and suddenly no one knew that Sugar Ray used to be a metal band because consumers weren't forced to buy the other eleven songs on Floored. This means Sugar Ray's label, Atlantic (WMG), went from selling a $14.99 product to selling $.99 product -- a $14 loss before royalties are even factored. Not too good for Atlantic -- and even worse for Tower Records.

"The iTunes Effect" eventually led to the closure of larger retail chain satellites such as the Virgin Megastores (all US locations are now defunct) and Tower Records (the few that do still exist in Ireland, Mexico, and Japan are all owned and operated independently of the original parent company). And yet smaller record shops such as Chicago's Gramaphone, Dusty Groove, and Reckless have all weathered the supposed destruction of the record store quite well.

Nielsen SoundScan reports nearly a 7% increase in all music sales for 2011. In fact, 2011 was a record-breaking year, with 1.6 billion units (albums, single tracks, videos, etc.) sold. 2011 was the first year to see a rise in album sales since 2004, the launch of the iTunes Store. Album sales were up across all formats with the exception of CDs, sales of which dropped by almost 6%. Internet album sales (e.g. ordering a CD or LP from Amazon, for example) rose 17% and digital album sales (e.g. iTunes) rose 19%.

The vinyl market led the way in increased sales. Vinyl sales climbed an impressive 36% in 2011, and though that number is big, it's worth noting that Nielsen doesn't track used record sales -- which accounts for a sizable portion of the vinyl market. Though the numbers aren't analogous to the cash profit excesses of the booming 90s, sales indicate that vinyl LPs are once again becoming a vital product for record stores.

"The impact of vinyl is huge," states Patrick Monaghan, founder and owner of Carrot Top Distribution (CTD), Ltd. CTD has been distributing indie rock records to retailers since 1996, and of late, has reaped the benefits of dealing within the vinyl market. Though total vinyl units sold (3.9 million not including second-hand sales) pales in comparison to that of CDs (223 million), the -5.7% increase in CD sales is dwarfed by the 36% increase in vinyl sales. This increase is vital to organizations such as CTD, where Monaghan states, "Vinyl sales make up 55% of all of our sales if that gives you an idea of the tiny, tiny niche we operate in."

Vinyl and indie rock appear to go hand-and-hand. A glance at the top vinyl artists for 2011 reads like a who's who of millennial indie rock luminaries (Bon Iver, Fleet Foxes, Wilco), the most influential musicians of all time (the Beatles, Hendrix, Dylan), and a few who fit in both categories (Radiohead, Tom Waits). For a retailer like Reckless Records, where the focus has always been popular indie rock, 2011's record-breaking numbers provide an exciting start to 2012.

"We began focusing on vinyl about five years ago," says Matt Jencik, a buyer for Chicago's Reckless Records since 1999, "and each year, [vinyl sales] grow bigger and bigger." 2011 showed no signs of that trend slowing. "Vinyl sales were through the roof," Jencik says of the 2011 holiday season, "we were ordering records everyday up to Christmas. For someone who's 20 at this point, not only did they [likely] not grow up on vinyl, but they may not have listened to CDs."

However, Jencik does admit, "[Vinyl] is not quite a boutique item. A store that only carries vinyl needs to be careful. It could peak." Reckless combats these concerns by maintaining a broad spectrum of products, including video games, DVDs, CDs, and more. Other record stores are diversifying in other ways, such as saki -- host of Epitonic saki Sessions and retail arm of CTD, Ltd. -- which offers books, fine art, and even musical instrument accessories and gear to its customers as well as hosting book signings and art openings. "But this year I've noticed more people having conversations and asking for advice about starting their [vinyl] collections," says Jencik, alluding to the social role that record stores continue to provide.

A combination of vinyl's perceived superior sound quality over digital recordings (CDs and MP3s) and pop culture's addiction to nostalgia -- as mapped out in Simon Reynolds' Retromania -- has maintained the format's undeniably "cool" status. Each year sees more t-shirts with turntables on them, more dorm rooms with turntable posters littering the walls, and, now -- with help from massively-selling artists such as Adele, the Black Keys, and Mumford & Sons -- there are more sales of vinyl records than in the previous ten to fifteen years. Couple this "cool factor" with the record store's ability to offer of a product that subscription streaming services can't (music ownership) and what digital outlets lack (a physical product of superior audio quality that is impervious to computer crashes) and the independent record store has a viable product to help sustain its business. Only two years ago there were claims that albums were becoming obsolete. Now it appears as though albums may be revitalizing the music industry and saving the record store.